Shares across Asian markets saw significant declines on Friday, as key indices in Japan, Hong Kong, and South Korea all plunged by over 2%. This downturn came in response to U.S. President Donald Trump’s announcement of a 25% tariff increase on imports from Mexico and Canada, alongside a doubling of tariffs on selected Chinese goods to 20%. This escalated market anxieties and left investors grappling with uncertainty.
In Tokyo, the Nikkei 225 suffered a steep fall of 2.9%, closing at 37,155.50. The drop was fueled by substantial declines in the technology sector. Notable losses included Advantest, a maker of semiconductor test equipment, which plummeted 8.8%, while Disco Corp. fell 10.3%, and Tokyo Electron decreased by 4.5%.
Hong Kong’s Hang Seng index saw a sharper drop, plunging 3.4% to end the day at 22,905.52. The Shanghai Composite index also experienced a dip, losing 2% to settle at 3,320.90. The news exacerbated existing tensions regarding global trade relations.
Trump’s confirmation came on Thursday regarding the implementation of these tariffs from March 4th for imports from Canada and Mexico. In a counter-response, the Chinese Commerce Ministry expressed formal objections, citing that the increases infringe upon international trade laws and pose additional burdens on both American businesses and consumers. It further warned against the potential destabilization of the global industrial chain.
Reflecting the regional trend, South Korea’s Kospi index slumped 3.4% to reach 2,532.78. Meanwhile, Australia’s S&P/ASX 200 declined 1.2%, finishing at 8,172.40.
Previously, on Thursday, Wall Street suffered setbacks with the S&P 500 dropping 1.6% to 5,861.57. The Dow Jones Industrial Average also fell, albeit slightly, by 0.4% to 43,239.50, and the Nasdaq composite saw a hefty decline of 2.8%, closing at 18,544.42.
This continued drop in the stock market follows a trend where the S&P 500 has decreased in five of the last six trading sessions, despite achieving a record high the previous week. The prevailing concern centers around the U.S. economic outlook, especially with tariffs potentially exacerbating inflation and the increased threat of government worker layoffs sparking higher unemployment rates.
A notable development was Nvidia’s performance, a powerhouse in the market known for its leadership in artificial intelligence technology. Despite posting better-than-expected earnings, Nvidia’s stock fell by 8.5% due to concerns over competition from China’s DeepSeek, which claims remarkable AI capabilities without relying on high-cost chips.
Conversely, there was a rise of 1.7% in shares for Berkshire Hathaway, managed by the illustrious investor Warren Buffett. The conglomerate’s increase underscored its strategic reserve of cash, with Buffett possibly eyeing future investments if market valuations become more favorable.
Amidst the tariff talks, American households are experiencing heightened economic concerns. Their spending has been crucial in staving off a recession in the U.S., hence maintaining confidence in ongoing economic stability is vital. Such market unease could pressure the Federal Reserve, which may find it challenging to navigate an economy where both slowing growth and rising inflation are prevalent.
Despite the turbulent environment, recent government estimates affirm the U.S. economy’s robustness during the final quarter of 2024, though inflation estimates for the same period have been revised upwards. Additionally, more U.S. workers sought unemployment benefits last week, marking a three-month high, but this figure still remains far below levels seen during previous economic downturns.
On the commodities front, the early trading on Friday witnessed U.S. benchmark crude oil dip by 61 cents to $69.74 per barrel, alongside Brent crude falling by 57 cents to $73.00 per barrel. In currency markets, the U.S. dollar gained strength, rising against the Japanese yen to 150.03 from its previous 149.82, while the euro slightly declined to $1.0390 from $1.0401.
